‘Grand Bargain’ May Be Anything But

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They say that Social Security is the third rail of American politics: Touch it and you die.

That dictum extends to Medicare and even Medicaid as well. I’d like to take this opportunity to remind President Obama and members of both parties in Congress of why that is.

If you are an ordinary American worker, you might be unlucky enough to learn a new buzzword of the health care industry: memory care. It refers to the health care assistance some older people need to do basic things like take the correct pills on the right day, get bathed and dressed safely, and remember whether they already ate lunch.

This care is incredibly expensive — several thousand dollars a month in a live-in facility. If your mother or father needed memory care, how would you pay? With costly private long-term care insurance? Savings? Would you or your spouse cut back work hours or leave the workforce to provide the care? Or should Medicare and Medicaid pick up some or all of the cost?

The AARP estimates that two-thirds of people over the age of 65 will need long-term care of some sort. Median costs in the U.S. for an assisted living apartment are $3,300 a month, usually paid for with private funds. Nursing homes are more expensive, with a median annual rate of $81,000, costs that can be covered by Medicare or Medicaid.

It’s not surprising that talk of “entitlement reform” and “grand bargains” and “hard choices” coming out Washington make voters nervous.

We’re supposedly hurtling toward a “fiscal cliff” in January, when drastic federal budget sequesters will kick in unless the president and Congress can avert them with a budget agreement that enacts some combination of tax increases and spending cuts.

What should be cut? Both Obama and members of Congress have suggested that $400 billion could be cut from Medicare. Another idea getting a lot of play is to raise the Medicare eligibility age from 65 to 67.

This may sound good to some, but it will amount to robbing Peter to pay Paul. A Kaiser Family Foundation study estimated that doing so would mean “increased state and private-sector costs would be twice as large as the net federal savings.”

If put in place by 2014, Kaiser estimated $5.7 billion in net federal savings, but $11.4 billion in higher health care costs to individuals, employers and states. Hardly a grand bargain.

Besides, how many 66-year-olds are employed with the full benefits of health care? Or can rely on pension plans with health care coverage intact?